From 1-Way Supply “Chains”  TO Circular Systems

Approx. time to read: 8 minutes

Since the Industrial Revolution (if not further) the way business has thought about products and services has been basically 1-way – dig materials up, make a product, sell it to someone, forget about it – and repeat….

However, tomorrow will not be like yesterday – so unless you’re making a product that’s totally compostable then you should be aware that:

1. Overall, our default industrial era 1-way supply chain is barely 1% resource efficient.  It wastes 99% of the resources it extracts from ecosystems. So improving it’s efficiency is a massive cost-saving opportunity.

2. Many of the wastes produced by industry today are complex compounds that can be super-difficult to reprocess – because they were never DESIGNED for recovery and re-manufacturing.  So even what’s valuable gets downgraded. Trees become paper, paper becomes toilet tissue.

3. Waste costs have historically been paid either by governments (who manage landfills) or communities and ecosystems (which become unpaid waste dumps). But that’s changing – fast.

4. Extended producer liability legislation is growing around the world. It’s not just being applied to consumer electronics, either. So the company making a material is going to increasingly be required to pay the cost of its disposal.

5. The costs of disposing of waste are growing – whether it’s the skip outside your factory or the green waste bin outside your home. These costs will continue to grow – so innovate sooner rather than later.

Close the Loop, build a business

Australian business Close the Loop® is a fascinating case study. It was founded in 2001, and has since grown to operate across Australia, New Zealand, the US and Europe.

The idea for Close the Loop® grew out of an existing imaging supplies distribution company and their need to respond to competitive market pressures.

Under price pressure from large multinationals and cartridge refillers, founder Steve Morriss developed a unique selling proposition – to take back and recycle everything he supplied at the end of its life.  His customers and suppliers bought it and Close the Loop® was born.

(Their public face in Australia is the Planet Ark collection bins you see in office supply shops.)

Today Close the Loop® is an innovative materials recovery company, specialising in the collection and recycling of toner and inkjet cartridges, toner bottles as well as other print consumables.  They have developed and commercialised processes to turn old printer cartridges into a range of products – from pens to asphalt – and operate globally. (They listed on the Australian Stock Exchange in December 2021.)

Their Not For Profit partner Planet Ark is now championing Circular Economy innovation across Australia, across a broad range of opportunities – from coffee grounds to consumer electronics.

Smarter business strategy closes loops

In a forest there is no waste – there are only endlessly circulating nutrients. Tree branches fall, animals die and their remains rot. Microbes and fungi are just some of the natural processes that turn waste into nutrients.

So smart businesses are increasingly adopting the mantra:

There is no waste – only byproducts with value potential

Everything you don’t sell to a customer is a BY-PRODUCT. And as INSIGHT-02 discussed, it should be either:

A biological nutrient – which can be safely composted in a home composting facility

OR

A technical nutrient that can be upcycled into a valuable, useful product or material.

And if it’s not either – if it’s a noxious chemical hybrid or “unusable” – then what you have is an innovation opportunity.

So the supply chain stops being a 1-way mine/make/use/dump road to landfill  and becomes a network – circulating technical nutrients while retaining their value.

The new “efficiency” is in a Circular Economy that:

1. Eliminates waste and pollution – by design
2. Circulates products and materials – continuously

Regenerates the ecosystems it cannot exist without
Source:Ellen Macarthur Foundation

More about the knowledge base and design principles

There’s a growing body of knowledge – and practice – around designing circular supply chains.  It involves much more fun than creating “recyclable products”:

• A rich source of resources is the not-for-profit The Ellen Macarthur Foundation, then check your local industry groups for Circular Economy activity.
• There’s an excellent set of resources now available in this Circular Design Guide – a product of a collaboration between IDEO and The Ellen Macarthur Foundation.
• There’s a straightforward summary of Circular Economy Business Strategies in a Medium  article written by The UnSchool’s Leyla Acaroglu.

More examples of circular business innovation

In the earlier INSIGHT-02 on rethinking waste, I mentioned the way a couple of Cairns banana farmers are turning “waste” dried green bananas into a range of gluten-free flours. In a similar vein, they also process the “waste” from their sweet potato crop into sweet potato vodka.

In Melbourne’s City of Hume, Close the Loop® is working in collaboration with Downer, Hume City Council, Sustainability Victoria and RED Group to build the first ever Australian road with soft plastics, glass and toner. The result is that Hume ratepayers get stronger roads and their problem wastes are reused locally.

Where could you scan for opportunities?

Many of the entrepreneurs I’ve studied found their opportunities through curiosity – they noticed something “odd” and investigated. Our banana farmers got started when one of them drove a tractor through an old waste pile and kicked up a cloud of sweet “dust”.

However, you could also be intentional – you could start to explore known problems and scan for solutions. These days you don’t have to be an inventor – there’s a wealth of opportunity in scaling something that already exists. Add a twist of creative restructuring and you could create a whole new opportunity.

For example, you could start with Drawdown’s modelling – which ranked Reduced Food Waste as the #4 solution for reversing global warming in it’s first report..

Locally, a bit of research on food waste would have told you that:
“food waste at the farm gate, which currently accounts for 10 per cent of Australia’s gross food production, is valued at $4b”  AICD 2019
You could be researching a new startup OR you could have a business that handles physical products or manufactures products from raw materials.

In either case, some Circular Economy research combined with studying local waste issues could yield rich results. If you need a bit of structure, apply your preferred business development tool – something like Blue Ocean Strategy or Business Model Canvas.

What are the questions to ask?

Here are some questions to plug into your question-answering machine (tr. your brain):

• Who’s doing Circular Economy innovation in our location / industry?
• What’s in our dumpster that we don’t know the value of?
• What’s the downstream cost of processing what’s in our dumpster?
• What’s the ecological footprint – in energy, emissions and ecosystem impact – of what we use and what we call “waste”?
• What are the wastes in our local area – or our industry – that are hidden resource treasures waiting to be turned into value?

So over the next few days, see what shows up for you as you start to question Business-As-Usual.

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